Venezuela Is No Ukraine

Raul Gallegos is a Bloomberg View contributor, who covers Latin American politics, business and finance. He was a columnist for Reuters and a correspondent for Dow Jones and the Wall Street Journal. He is a graduate of the University of California at Berkeley and Columbia University. He grew up in El Salvador and is based in Colombia.
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The political protests roiling Venezuela have led some to wonder whether its government would collapse like that of Ukraine's. It won't -- at least, not yet.

What makes Venezuela's government so different is its absolute dominance of all the main levers of political power. President Nicolas Maduro's administration wields unquestionable control over the Supreme Court, the Congress, the military and the oil industry -- the very institutions that could threaten his regime.

Generously compensated oil worker unions support the Maduro administration, which means that a replay of the strike that paralyzed the industry in late 2002 in hopes of unseating former President Hugo Chavez seems highly unlikely.

To see why, consider the petroleum workers' march that Oil Minister Rafael Ramirez led to the presidential palace last week to express support for the government in the face of opposition protests, a demonstration that conveniently coincided with the signing of a new labor contract for the workers. Ramirez made plain the dual purpose of the staged event when he said: "This is not just about the contract, it's against fascism that promotes violence in the country." Workers got a 67 percent raise in daily pay, plus an increase in other benefits.

The armed forces also signaled where their loyalty lies. Defense Minister Admiral Carmen Melendez in a televised address last week said that the military would "never -- listen carefully -- accept a government that doesn't emerge from constitutional procedures." As if to dispel any lingering doubts, Melendez added: "Our president and commander in chief Nicolas Maduro, the people and the armed forces are working together, more than ever, and we won't allow" attempts to unseat the existing government.

Since coming to power almost a year ago, Maduro has named 386 members of the military to political posts, and they now run almost a quarter of all government ministries. To further ensure the military's loyalty, Maduro in November said he would raise the salaries of the army and gave out special Christmas bonuses. This came on top of salary increases of as much as 60 percent that went into effect in October.

Venezuela's congress, dominated by Maduro loyalists, in November approved special powers so the president can pass laws by decree without consulting lawmakers for as long as a year. This means the current congress would be far from willing to support those who want Maduro out. And for those hoping Maduro would be forced to resign in the face of protests, Cilia Flores, the current first lady and former member of congress, spelled it out at a rally over the weekend: "Venezuela is not the Ukraine. Fascism and violence won't prevail here."

Discontent with Maduro is undeniable. Annual inflation is running at 56 percent and product shortages are common. The central bank's product-shortage index touched a historic 28 percent last month, which means one out of every four products tracked is missing from store shelves. Almost half of voting Venezuelans opposed Maduro's administration in December's municipal elections, though that isn't enough to threaten his grip on the country.

Venezuela has seen worse economic troubles in the past. Inflation in the 1990s at one point topped 100 percent. What's more, Venezuelans have a history of disliking their presidents and being co-opted for long periods of time by generous government patronage.

The question is which is stronger: Venezuelans' sense of dependency on handouts or their frustration with a deteriorating economy that offers few job prospects, few goods and services, and few outlets to denounce government inefficiency. So far -- for a large portion of the population -- dependency has won. The success of Chavez's movement lies in its ability to convince the poor that receiving a paycheck or government subsidy with inflation is better than being dispossessed, which is what Chavistas say would happen if they leave office.

During the last 15 years, Chavez and his heirs have shown that they know how to squeeze enemies and use short-term solutions to ease political tensions when needed. Maduro's government may do the same.

The president partly gave in to demands from businesses last week when he eased foreign-exchange restrictions so companies and individuals could more easily access dollars, a decision that could temporarily help ease product shortages. He disguised his move in revolutionary rhetoric when he said: "We seek to twist the arm of the perverse, phantom market called the parallel dollar."

Maduro's call to meet opposition leaders this week is another opportunity to try to appease in private the anger Venezuelans express in public. Mindful of the people's need to blow off steam the president even declared a public holiday on Thursday in a bid to send angry Venezuelans off for the Carnival vacations early. Still, in a last-minute decision, opposition leaders canceled yesterday's scheduled talks with Maduro's government.

Opposition leaders may gain political capital from the current discontent. But only broad unrest among the poorest members of society could shake Maduro's control. Former presidential candidate Henrique Capriles Radonski made that clear when he declined to support the recent opposition led protests earlier this month: "Where are the poor in all of this? There's none, and we won't participate because we won't fall for this, we won't let ourselves be carried away" by events.

(Raul Gallegos is the Latin American correspondent for the World View blog. Follow him on Twitter @raulgallegos.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

Raul Gallegos is a Bloomberg View contributor, who covers Latin American politics, business and finance. He was a columnist for Reuters and a correspondent for Dow Jones and the Wall Street Journal. He is a graduate of the University of California at Berkeley and Columbia University. He grew up in El Salvador and is based in Colombia.
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